What do you understand by capacity of contract
Introduction
Under contract act 1872 parties must be competent to contract. Everyone is not competent to enter into the contract unless he fulfills the conditions laid down in the contract act. A contract made by an incompetent person is invalid or void contract. There are several things that make a person legally able to do a contract, including age and state of mind. Minors, the mentally insane, and persons who are under the influence do not have legal capacity to enter into a contract.
Contractual capacity
According to section 11 of the contract act” Every person is competent to contract who is of the age of majority according to the law, & who is of sound mind , and has not been disqualified by any law from contracting
Persons competent to contract
Following are the persons who are competent to enter into the contract
Adult
A person who has attained 18 years of age in adult under contract act 1872. And an adult can enter into the contract
Persons of sound mind
The person who wants to perform a legal contract should be of sound mind, he must have ability to judge the matter and must be able to perform civil duties is a sound mind person.
The unsoundness of mind has been categorized into following types
Person usually unsound minded
Person who has an unsound mind. But occasionally of sound mind. He can make a contract when he is of sound mind
Person usually sound minded
Person who is usually of sound mind. But occasionally of unsound mind. He cannot make a contract when he is unsound mink
Example
A patient in an insane, who is at intervals of sound mind, can make contract during intervals
Persons not disqualified by law
Persons who have not been disqualified by law. If a person who has not disqualified by law, is capable to enter into contract
Persons not competent to contract
Following are the persons who are not competent to enter into the contract
Minor
A minor is a person who has not attained the age of 18 years. And people below this age are sometimes called minors in the context of contract law. Such person who are minor cannot enter into the contract
Rules relating to minor’s agreement
- A minor is not competent to contract
- A minor’s agreement has no validity in the eye of law
- A minor cannot be compelled to pay back the money received by him under an agreement
- A minor cannot be held responsible for breach of contract
- The parent can be held liable if the minor act as agent of the parent
Where a minor and an adult jointly enter into the contract with another person, the minor will not be held responsible but only adult would be held responsible
- A minor cannot be declared bankrupt
- A minor can only be receiver
Persons of unsound mind
Mentally disturbed person cannot make a valid contract because he is unable to understand the terms and conditions of the contract that’s why he is incompetent to enter into the contract
Causes of unsoundness of mind
Following are the causes of unsoundness of mind
- Insanity
- Drunkenness
- Old age
- Effect on agreement
A contract made by a person of unsound mind is void
Burden of proof
The burden of proof is in hands of the party who wants to cancel the contract
Persons disqualified by law
Persons who have been disqualified by law. If a person who is disqualified by law he is incompetent to enter into contract
Joint stock company
Joint stock Company whose stock is owned jointly by the shareholders, has been declared in-competent by the court of law to enter into the contract
Foreigner
Foreigners have been declared in-competent by the court of law to enter into the contract
Convict
A person who is under imprisonment has been declared in-competent by the court of law to enter into the contract
Bankrupt
A person bankrupt has been declared in-competent by the court of law to enter into the contract
Diplomat
Diplomat and ambassadors have been declared in-competent by the court of law to enter into the contract
Intoxicated Persons
It has been declared by the court that contract made by a person who drunk because he does not know the consequences of his act is that’s why such a contract is not void but merely voidable, but if the drunken party, upon coming to his senses, approves the contract, he is bound by it
Conclusion
Every person is not competent to enter into the valid contract. A contract made by impotent person is invalid or void in the eye of the law. Mentally disturbed people have been declared incompetent by the court of law for entering into the contract. As well as minors also are not capable of entering into the contract. All those person can enter into the contract who are declared competent by the court of law such as an adult who has attained age of 18 years and has sound mind and legally authorized person can make the contract